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Learning About a Budget

Learning About a Budget . Mansfield University Trio . Melissa Wise -First Citizens National Bank. Learning Strategies. Students will demonstrate the weekly budgeting process and instill a precise dollar amount on weekly costs

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Learning About a Budget

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  1. Learning About a Budget Mansfield University Trio Melissa Wise -First Citizens National Bank

  2. Learning Strategies • Students will demonstrate the weekly budgeting process and instill a precise dollar amount on weekly costs • Students will study and acknowledge the dangers of borrowing too much money, driving credit card balances too high and living with extensive debt

  3. Steps for Planning • Check your mindset • Recognize pitfalls • Set goals • Begin to budget • Follow through with budgeting • Invest/Save $

  4. What does financial success mean to you? • Enough money to take care of your needs. • Enough money to pay for reasonable wants. • Enough money to save for your goals.

  5. How $ Adds Up • A cup of coffee every day • $547 a year • 2 packs of cigarettes a day • $2555-$3285 a year • Lunch out during week ($5-10) • $1300-$2600 a year • 3 drinks a week at a bar • $936-$1092 a year

  6. Check Your Mindset • What do you really want financially? • How disciplined are you? • Can you live without for short-term? • If you overspend, why? • Remember, money does not equal self worth…

  7. BUDGETS • A BUDGET HELPS YOU ORGANIZE YOUR SPENDING BY: • telling you what money comes in, what money goes out, and where it goes • helping you identify expenses that aren’t as important to you so you can free up money for those that are • showing you where some changes might be needed

  8. BUDGETING PITFALLS There are three main reasons budgets fail. 1. Negative attitude – Try not to think of a budget as a financial diet. Try to think of it as a means to an end. 2. Lack of motivation – The best motivators are generated internally. It is important to honestly believe that budgeting can help you meet your goals. 3. Unrealistic expectations – The reality is that budgeting is an endurance event. Those who stick with it through thick and thin will come out ahead financially.

  9. TIPS FOR CREATING A BUDGET • Use a template • Add/delete categories as applicable • Plan on paying more on higher interest rate credit cards or loans • Prioritize your spending by determining wants versus needs • Have both a positive attitude and a positive ending balance • Put any annual payments into monthly payment figures

  10. CREATE A BUDGET • Hypothetical budget assuming: • Salary of $35,000/12 Months = 2900 – 20% tax = $2300 Per Month • Average credit card debt of $5,781 with a minimum payment of $231 • Student loan debt of $18,000 with a payment of $147 • Rent of $400 • Car payment of $315 • Using the numbers above,Please complete the Sample Template: budgetworksheet.doc

  11. Step 1 - Wants vs. Needs VS

  12. Step 2 - Set S.M.A.R.T. Goals • Specific – clearly identifies need or want. • Measurable – can easily measure progress. • Attainable – choose a realistic and probable goal. • Relevant – important to you & consistent with other life plans. • Time-related – set a definite target date.

  13. Setting Financial Goals • Review your goals and think about how realistic & essential they are • Break down choices into actionable steps. • How will you cut expenses by $151 a month? A second job at Target. • Determine short-term and long-term goals and actions • Budget for these goals!

  14. Invest and Save $ • Good budgeting should allow for saving each month • Balanced Money Formula: spend no more than 50% of your disposable income on your needs (Housing, Utilities, Food and Travel), spend 30% on your wants, and save 20%.

  15. Review… • Please review these few websites before proceeding… • Open and browse them for subject matter in order to use them as resources for completing some credit questions. • Web Sites: • Read and watch the 2 minute video: http://www.themintgrad.org/learn/budgeting-basics/budget-real-talk/ • http://www.mymoney.gov/mymoneyfive/Pages/mymoneyfive.aspx

  16. Apply… ***Please answer these questions in 3-4 complete sentences citing the PowerPoint slide or website where the information pertaining to the question was found*** • What are the three things we should consider before making a purchasing decision? • What were your Saving Goals #1 and #2, How much money was allocated to these after necessities were paid? • What are the five principles we should keep in mind during day to day money decisions?

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